By Riley Beggin, The Detroit News (TNS)
The U.S. Treasury Department released proposed guidance Friday for point-of-sale discounts many consumers will be able to get on electric vehicles beginning Jan. 1, 2024.
The consumer discount is one of the significant changes to electric vehicle tax credits implemented under the Inflation Reduction Act, Democrats’ climate and clean energy bill that passed last year.
The 2023 Chevrolet Bolt EV is among the vehicles that qualify for the revised electric vehicle tax credit.
Under the new law, new vehicle buyers can get up to $7,500 off certain plug-in electric vehicles or fuel cell vehicles if they make less than $150,000 (or $225,00 for heads of households and $300,000 for married couples). Consumers can also get $4,000 off a used EV or fuel cell vehicle priced less than $25,000 if they make less than $75,000 for individuals, $112,500 for heads of households and $150,000 for married couples.
New EVs must meet specific thresholds for where their battery components and mineral content comes from and fall below certain price caps. There are currently 11 electric vehicles eligible for the full new vehicle credit, including models such as the Ford F-150 Lightning, the Tesla Model 3 and the Chevrolet Bolt, while others qualify for a partial credit.
“President Biden’s Investing in America agenda is focused on lowering transportation costs for consumers and giving American car companies the tools to lead the market,” said Laurel Blatchford, who leads implementation of the Inflation Reduction Act for the Treasury Department.
“For the first time, the Inflation Reduction Act allows consumers to reduce the up-front cost of a clean vehicle, expanding consumer choices and helping car dealers expand their businesses. The IRS has focused on streamlining this process for car dealers as part of its commitment to improving service and helping taxpayers claim the credits they are eligible for.”
In late October, dealers will be able to register on a new IRS website called IRS Energy Credits Online in order to offer consumers the tax credit. The IRS will verify that the dealer is licensed in order to stave off fraud. In January, those registered dealers can submit sales information on qualifying EVs and receive the credit, which Treasury says will be passed along to consumers as a discount.
When a consumer plans to buy a vehicle, the dealer will be asked to submit a “time of sale” report confirming the vehicle’s eligibility for the credit and will be issued the credit within 72 hours.
Car buyers can receive the credit if they attest to meeting the income limits, but will have to pay it back to the IRS if they exceed the income limits when the file their taxes the next year.
Because the dealer is supposed to pass along the value of the credit to the consumer, either as a cash refund or as a discount off the total price of the vehicle, the credit doesn’t contribute to the dealer’s tax liability at the end of the year.
In the case of leased vehicles, the owner of the vehicle would receive the credit rather than the person leasing the vehicle.
Used vehicle credits can only be claimed once, on vehicles that have been previously owned but have not been transferred to a new owner since Aug. 16, 2022.
The proposed guidance will undergo a public comment period before being finalized.
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©2023 www.detroitnews.com. Visit at detroitnews.com. Distributed by Tribune Content Agency LLC.
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Tags: Income Tax, IRS, Taxes
